FERC approves sale of Somerset's Brayton Point power plant

Tuesday

Aug 20, 2013 at 12:01 AMAug 20, 2013 at 8:19 PM

Dominion officials confirmed the sale of Brayton Point is on the verge of completion.

The Federal Energy Regulatory Commission on Tuesday issued its approval on conditions of the sale from Dominion to Energy Capital Partners, an energy infrastructure firm with main offices in Short Hills, N.J., and San Diego, according to reports by the owners and FERC.

Michael Holtzman

Dominion officials confirmed the sale of Brayton Point is on the verge of completion.

The Federal Energy Regulatory Commission on Tuesday issued its approval on conditions of the sale from Dominion to Energy Capital Partners, an energy infrastructure firm with main offices in Short Hills, N.J., and San Diego, according to reports by the owners and FERC.

“We will close upon completion of financial transaction activities expected to be in the next several weeks,” Genest said.
Selectmen Chairman Donald Setters he was told the sale could be finalized in a week or so.

A 20-page report by FERC Deputy Secretary Nathaniel J. Davis Sr. states that the sales authorization was granted over protests by the Conservation Law Foundation, a New England environmental protection group, addressed in the FERC report.

“We agree with applicants (Dominion ownership) that Conservation Law’s assertions concerning future operations of the Brayton Point facility are speculative and go beyond the scope of these proceedings,” Davis concluded.

Among affects to southeastern Massachusetts and Connecticut, the Conservation Law Foundation said as a result of this transaction, they believed constraints might arise in the ISO New England market where Brayton Point wholesales electricity.

In relation to this sale, which has been delayed some months, the foundation also argued, FERC said, “that across the nation aging, outdated coal- and oil-fired electric generating facilities have been retiring apace, and the trend is no different within the ISO-NE area.”

FERC rejected those contentions in its lengthy authorization report.

Dominion, which owns more than 40 power plants, mostly in Virginia, announced the sale of Brayton Point Power Station to ECP in mid-March.

Local officials said they’ve been told protests to FERC by the nonprofit Conservation Law Foundation have delayed the sale.

Brayton Point, the largest facility, was part of a $650 million sale, which included $472 million in cash and after-sale tax benefits, with two other Dominion power plants in Illinois.

The company plans to invest the proceeds in its regulated businesses and to reduce debt.

One of the Illinois power plants is 1,158 megawatts coal-fired, while the Elwood Power Station near Chicago generates 1,424 megawatts from natural gas, Genest said. Dominion owns half the interest in that plant.

The 1,530-megawatt Somerset plant supplies three-fourths of its energy from coal, with one 435-megawatt unit run by natural gas or oil, but mostly using oil, Genest said.

Since purchasing the plant on Jan. 3, 2005, Dominion said it has invested $1.1 billion in environmental improvements, about half of that amount for the huge, dual cooling towers that officials say have reduced thermal impacts into Mount Hope Bay by 90 percent.

It’s the largest coal-fired power plant in New England and one of the largest in the region using fossil fuel.

The power plant generates enough energy to furnish electricity to 1.5 million homes.

Dominion’s Genest referred any specific sales information to the company press release issued five months ago, and declined to break down the value of Brayton Point.

Local officials have said a recent appraisal price the company asserted was $260 million — down from $663 million the town assessed — but Genest declined to confirm that figure.

ECP ownership and media relations officials did not return several phone calls for comment Tuesday.

Setters said based upon two conversations with ECP, he believes the new owner “is going to attempt to maintain the status quo of that plant … just like it’s been running.”

Brayton Point’s first 243-megawatt unit became operational in 1963, and the last of its four units went on line nearly 40 years ago.

ECP in 2010 formed a natural gas generation company, EquiPower Resources, which bought five Northeast power plants, including a 189-megawatt facility in nearby Dighton.

“I think EquiPower understands the need for diversification,” Setters said of a reduced priority toward coal in this state and the country.

Dominion plans to decommission two of its 40 power plants in Virginia — both run by coal — by 2015, Genest said.

Both Setters and Genest said efforts between the two sides to reach a critical tax treaty and real estate and personal property is starting to yield positive results.

“There’s definitely been movement on both sides to close gap,” Setters said of the closed talks. “There’s a give-and-take element to it.”

“We are encouraged that negotiations are progressing,” Genest said.

The tax treaty is critical in order for the town to qualify for up to $3 million in state funds to offset greatly reduced tax revenues from Brayton Point the past two years and going forward.

Since a 10-year tax treaty expired after fiscal 2011, Somerset and Dominion officials have been negotiating unsuccessfully.

Setters said the figures being negotiated are “completely based on revenues.”

Town Administrator Dennis Luttrell said he was aware of FERC’s action through Setters.

“We anticipated that this would be coming,” Luttrell said.

“We still have a situation in regard to the tax appeals. We’re looking forward to making contact and having discussions with the new owners,” Luttrell said.

One key step for the town actually begins tonight when the Local Fiscal Taskforce holds its first meeting at 5 p.m. at Town Hall, 140 Wood St., in an effort to increase business revenues to offset reductions in tax revenues that averaged $12 million to $13 million a year from Brayton Point.

The town has appropriated about $6 million the past two years into its abatement overlay account in anticipation that Dominion could successfully recoup a portion of taxes paid upon appeal. That includes $15.9 million the company paid for fiscal 2013.

“The situation’s not good,” Setters, a long-time assessor until this year, said of the market for coal-fired electricity generation.

“No matter how you look at it, that’s an extremely volatile situation. It can change on a dime depending how the markets do,” he said.

Setters said he was present at Brayton Point on July 28 when about 350 protesters marched there through town and 44 were willingly arrested in their pitch to shut down coal-fired power plants.

Setters said ECP and its EquiPower subsidiary told him “they were very concerned about the people picketing the power plant, even though they didn’t own it.”